• SEC Filings

On August 7, 2017, our indirect wholly-owned subsidiary, HomeFed Village III, LLC (“Borrower”), entered into a loan agreement (“Loan Agreement”) with Otay Village III Lender, LLC (“Lender”), for a loan in an aggregate amount not to exceed $125,000,000 (the “Loan”) for use in the development and construction (including the repayment of bridge loans provided by us for such development and construction) of the project known as Village of Escaya (“Project”), a pedestrian-oriented mixed-use urban village planned for approximately 1,266 homes and apartments on approximately 450 acres (the “Real Property”). The Project is part of the larger master-planned community known as Otay Ranch located in Chula Vista, California (“Otay Ranch Project”).

Lender is managed by Otay Village III Manager, LLC, our wholly owned subsidiary. The non-managing members of Lender are investors under the EB-5 Immigrant Investor Program (“EB-5 Program”).

Lender agreed to fund the Loan in either a single disbursement or through multiple disbursements. The date of the disbursement of the initial Loan advance (“Initial Funding”) is referred to as the “Initial Funding Date”. The amount of Initial Funding will not be less than $10,000,000. Prior to the Initial Funding, the Funding Approvals (as described in the Loan Agreement) sufficient to advance the Initial Funding must be obtained.

The outstanding principal balance of the Loan will initially bear interest at the rate of 5.0% per annum. The Loan matures on the last day of the 60th calendar month after the Initial Funding Date (“Maturity Date”). Borrower has two options to extend the Maturity Date for extensions of one year each. During any extension, the outstanding principal balance of the Loan shall bear interest at the rate of 5.50% per annum.

The Loan is evidenced by a promissory note and secured by one or more deeds of trust in favor of Lender on other real property parcels we own apart from the Real Property (“Collateral”). Lender’s obligation to make disbursements of the Loan is conditioned upon the recordation of deed(s) of trust covering Collateral such that the outstanding principal amount of the Loan following such disbursement does not exceed 50% of the appraised value of the Collateral (“Loan-to-Value Requirement”). While the Notes (as defined below) are outstanding, the loan-to-value ratio immediately following funding of any disbursement may not be less than 80% based on the total principal outstanding under the Loan and the total appraised value of all Collateral. In certain circumstances, we may provide a guaranty of a portion of the outstanding Loan amount in lieu of Collateral meeting the applicable appraisal requirement.

The outstanding principal balance of the Loan is due and payable on the Maturity Date. Absent an event of default, no payments of principal are due hereunder until the Maturity Date. Interest is payable on a quarterly basis, in arrears. Except as provided in the Loan Agreement, Borrower will not prepay the Loan, without the written consent of Lender and, so long as the Notes remain outstanding, the holders of the Notes. Borrower is required to prepay portions of the Loan in certain circumstances involving denials of immigration petitions of investors in Lender.

In connection with the Loan, we will provide to Lender a Provisional Refund Guaranty Agreement (“Guaranty Agreement”), dated as of the Initial Funding Date, whereby we will guarantee the repayment of all or some portion of the Loan upon the terms and subject to the conditions set forth in the Guaranty Agreement.

Borrower will use the proceeds of the Loan solely for the purpose of funding or reimbursing construction and development expenses payable or previously paid for the Project, including expenses paid or incurred prior to the Initial Funding Date (“Project Costs”). The Loan proceeds may be used to (i) pay Project Costs directly or (ii) repay any bridge financing.

The Loan Agreement contains certain representations and warranties with respect to Lender and Borrower, which include organization; limited liability company powers; authority; no conflict; consents and authorizations; government regulations; no litigation; no material adverse effect; payment of taxes; and purpose of entity. The Loan Agreement also contains certain affirmative and negative financial and non-financial covenants with respect to Lender and Borrower, including certain covenants related to the EB-5 Program.

The disclosure provided in Item 1.01 above is incorporated herein by reference.

(e) Compensatory Arrangements of Certain Officers

On August 4, 2017, the Board of Directors of HomeFed Corporation (the “Company”) granted options to purchase the Company’s Common Stock, par value $0.01 per share (“Common Stock”) to each of its named executive officers, to the Company’s Amended and Restated 1999 Stock Incentive Plan (the “Option Plan”). The options have an exercise price of $44.00 and vest at a rate of 25% per year, beginning on the first anniversary of the date of grant.

Paul J. Borden received 15,000 options, and John K. Aden, Jr., Christian E. Foulger, and Erin N. Ruhe each received 12,500 options in connection with their service as executive officers of the Company. Mr. Borden received a separate grant of 1,000 options for his service as a director, consistent with the Company’s annual director grants under the Option Plan.

Also on August 4, 2017, the Board of Directors authorized the establishment of an RSU Opportunity Plan (the “RSU Plan”) for the Company’s current named executive officers (the “Participants”). An aggregate of 66,000 shares of Common Stock will be available for issuance under the RSU Plan. Participants may be granted the opportunity to receive an award of restricted stock units (“RSUs”) for Common Stock based on satisfaction of pre-established performance criteria during the performance period specified in the Plan. Awards will be made after the end of the performance period in the sole discretion of the Board of Directors.

Subject to the satisfaction of the performance criteria to be specified in each Participant’s notice of award, the named executive officers will be eligible to receive the following range of RSUs: Mr. Borden, 9,000-12,000 RSUs; Mr. Foulger, 18,000-24,000 RSUs; Mr. Aden, 13,500-18,000 RSUs; and Ms. Ruhe, 9,000-12,000 RSUs.

About HOMEFED CORPORATION (OTCMKTS:HOFD)

HomeFed Corporation is a developer and owner of residential and mixed-use real estate projects in California, Virginia, South Carolina, Florida, Maine and New York. The Company operates through three segments: real estate, farming and corporate. Its real estate operations consist of a range of residential and commercial land development projects and other unimproved land, all in various stages of development, and retail and office operating properties. Real estate also includes the equity method investments in Brooklyn Renaissance Holding Company LLC (BRP Holding) and Brooklyn Renaissance Hotel LLC (BRP Hotel). Its farming operations consist of the Rampage property, which includes an operating grape vineyard. The Company, as the owner of development projects, is engaged in a range of activities, including design engineering, grading raw land, constructing public infrastructure and finishing individual lots for home sites or other facilities.